This invention relates generally to a financial transaction system and method, and more particularly to a computerized bill payment system for electronically processing an exception item included within the financial transaction to affect bill payment.
Today, most households spend a significant amount of time each month responding to numerous bills including utility bills, credit card bills, mortgage payments, car loan payments, insurance payments, etc. Traditionally, the bill payment transaction cycle includes the following steps: (a) generation of a bill by a biller; (b) mailing the bill to the customer; (c) customer writing a check for the invoiced amount and mailing the check along with a remittance slip to the biller; (d) biller manually depositing the check in their bank account; and (e) biller crediting customer's account and check clearing (i.e., physically sending the check to the customer's bank and sufficient funds in customer's bank account being identified and debited). This method is labor intensive and time consuming for a bill-payer, and must be done on multiple occasions each month since the bills do not normally arrive or become due on the same date. In addition, the bill-payer has to absorb the costs of postage in mailing the paper checks to payees. Paper checks processing also entails significant costs to the payees who receive and handle remittances in this manner.
Attempts have been made to improve the efficiency of the bill payment process. As a service to customers, some banks have made arrangements with designated payees to accept payment of invoices received in the mail by bank customers directly through the bank. A customer can bring their mailed bill to the bank and have a teller process the bill by debiting the customer's account and processing a credit to the biller which may be deposited in a biller's account with the bank or electronically transferred to an account in another bank used by the biller. The electronic transfer typically takes place over a data network interconnecting the two financial institutions. The remittance slip received from the client is then mailed to the biller, so that it can be reconciled with the mailed invoice.
At least one other automated bill payment process includes a computerized payment system through which a consumer may instruct a server by telephone, computer terminal or other telecommunications device to pay bills without having to write a check. In this system, a bill is received from a merchant in hard copy form and the consumer is able to make payment to the merchant through a centralized server coupled to a network. The payment system allows a consumer to establish a list of merchants to be paid, along with details regarding the financial institution from which funds are to be drawn for payment. To affect payment, a consumer contacts the server and enters payment instructions. Debiting and crediting of payments from financial institutions and merchants respectively is then facilitated by electronic funds transfer or paper check. In this system, bill information is not uploaded to the server. This system does not completely eliminate the generation of hard copies of bills from merchants or the processing of paper checks for merchant payment.
An additional example of an automated bill payment system includes a bill delivery and payment system which allows users to access a server via the Internet to facilitate bill payment. Using a personal computer, a user can view bill information and instruct the server regarding payment instructions. Bill information is uploaded from billers to the server for display to users. After a user has entered payment information, the user's bank account is debited and the biller is credited automatically.
None of these known automated bill payment systems are able to electronically process exception payments. In some known cases, payments that originate by a bill payment service provider may be fulfilled either via an electronic transaction or via a paper check. The primary method used to determine whether a bill payment is fulfilled electronically or via paper check is based on the data the consumer enters for the payment. If the data entered for payment matches the billing data (e.g., account structure, account length, remittance address, check-digit routine) provided by a biller, then the payment can be fulfilled electronically. If the data does not match, an originator will create a paper check containing the consumer entered data for the payment method. This creates an “exception item” for the biller as this payment will be sent without supporting remittance information (e.g., payment coupon, remittance advice, payment stub) to process through the biller's lockbox system. The biller must manually research and post the resulting exception item. Originators prefer to fulfill transactions electronically for several reasons including it is a lower cost fulfillment method, and the payment is posted more quickly if it is fulfilled electronically, which leads to greater customer satisfaction. Billers prefer electronic remittance as it reduces the time that sales are outstanding, improves their cash flow and increases customer satisfaction.
Accordingly, a system and method for electronically processing financial transactions that include an exception item to affect payment of a bill is needed, wherein an exception item includes, for example, a situation where data entered by the consumer for payment does not match the billing data provided by the biller, and wherein an exception payment typically results in a check being manually generated and processed.